Prime Hospitality Corp.
(NYSE: PDQ), a leading hotel owner, operator and franchisor, reported its
results for the third quarter and nine months ended September 30, 2001.
 
Net income before asset transactions and other charges for the third
quarter was $5.0 million, or $.11 per share, compared to $14.8 million, or
$.32 per share, for the third quarter of 2000.

Total net income, which includes gains on asset sales and other
non-recurring items, was $5.2 million, or $.11 per share, for the third
quarter of 2001 compared to $15.7 million or $.34 per share, for the same
period in 2000.

“Like most businesses, our results were affected by the softening economy
compounded by the terrorist attacks in September,” said A.F. Petrocelli,
Chairman and Chief Executive Officer of Prime.  “Our REVPAR for the quarter
declined by 13% with a 28% decline from September 11 to September 30.  We have
seen travel rebound since the attacks and our revenues for October are
approximately 15% below last year`s levels.”

“Since we have limited visibility, it is difficult to predict the timing
and extent of a recovery.  However, we are well positioned in this challenging
environment.  Our balance sheet remains strong with leverage at just 32% of
capitalization and we have taken a number of steps to preserve cash flow which
include implementing new cost control programs and limiting capital
expenditures. Our hotels offer significant value at moderate prices and we are
less reliant on those sectors expected to be most affected such as group and
convention business in urban markets and resort travel.  We have also
strengthened our competitive position with an expanded rewards program
launched on September 1 and our recently introduced national television and
radio ads for our AmeriSuites and Wellesley brands.”
 
Mr. Petrocelli concluded, “We believe that as the economy recovers and
travel improves, the combination of a strong balance sheet and well positioned
brands will provide us with opportunities for future growth.”
 
For the nine months ended September 30, 2001, net income was $35.4
million, or $.77 per share, compared to $50.5 million, or $1.08 per share, for
the same period in 2000.  Net income before asset transactions and other
charges was $26.3 million, or $.57 per share, for the first nine months of
2001 as compared to $40.8 million, or $.86 per share, for the same period in
2000.

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